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Dan Morris - 12/31/2008
I find selecting my favorite book for a year to always be a challenge. Largely because I read different genres and I read each for a different purpose. Ultimately I have to make a final decision and this year I have based my decision on the following criteria:
First, I wanted to select a book that was neither recommended to me nor one that was on the popular circuit. This may disqualify some very fine books, and clearly it does, however those books will find homes on other people’s lists. Just not mine.
Second, I wanted a book that surprised me, meaning it exceeded both my intellectual expectations and my emotional expectations. A book that does not touch the soul and alter a person’s emotional if not physical characteristics should not be a finalist. It takes more the exceptional prose, strong narration, and innovation to be a best book of the year (IMHO).
Third, I wanted to select a book that I bragged about as being worthy, even if no one else was interested beyond the “yawn” of another book story I would talk about
And finally, I would only select a book that I continue to think about months after reading it.
These are my criteria and may not be yours (nor should they be - as that would make your list mine and that would be redundant and probably boring, but I digress).
So, without further pain and suffering (on your part, not mine), my favorite book for 2008 is: Banana: The Fate of the Fruit That Changed the World by: Dan Koeppel (available at Amazon, Borders, B&N, and most probably your personal bookstore).
This is clearly the story of the banana and its historical and current impact in our lives. For instance, the banana is most probably the first fruit you ever ate and will most likely be the last fruit you ever eat. That the Apple referenced in the Garden of Eden story was most likely a banana. That the first banana’s rushed up the eastern seaboard from Jamaica to Boston around 1870 or so required peeling before bringing to market (they were wrapped in tin foil) as to help the Victorian ladies avoid embarrassment from viewing the banana’s, well.....you know....phallic nature of its natural shape. What really surprised me was that those early bananas sold for like $2 each (in 1870 that was probably like 2 weeks rent - I think Baker would agree that the subjective theory of value was alive and well in 1870 Boston, at least when it came to fruit).
I also learned more about the atrocities the U.S. based banana companies (ultimately known as Dole and Chiquita) were responsible for throughout Latin America and why Central America was referred to as Banana Republics. Other gems in this well written story (I must admit the first 60 pages didn’t grab me, but that was its only major flaw, and ultimately the story was well written and enjoyable to read) included the struggle to find a successor for today’s common marketplace banana (the Cavendish) because it will soon die out as a weakness in the banana DNA chain is that it is essentially sexless as each banana plant is an exact clone of the one that it sprong from and once disease enters a banana field, the entire field is ruined. Losing the Cavendish would be a political and nutritional disaster and more people would die from starvation than I would have ever imagined before reading this book. And something that doesn’t leave my mind whenever I read about or watch a program about worldwide starvation.
Additionally, I learned that for most of the world that grows bananas (and the locations might surprise (from Pakistan to the Philippines, from India to Israel, and beyond) bananas are generally eaten within 2 kilometers of their harvest. That the U.N. and other relief agencies would better serve the hungry by providing banana plants than say rice or wheat as the local populations know how to grow, cook, eat, and use bananas while wheat, rice, and corn are generally not supported by the local environment, hence making the starving populations more dependent on outside help then self supporting. I enjoyed the political history of the banana as told by Koeppel as it reinforced the value of a fruit that I had essentially ignored while consuming for nearly 50 years.
Bananas are regional and their flavors are regional as well. I never noticed them while shopping. But I have ventured out and tried bananas from around the world (a luxury of shopping a Whole Paycheck and traveling. So, beyond an enjoyable and engaging read, I have ventured out and improved my understanding of food.
I also learned a great deal about the early British explorers who spent their years cataloguing and sending back to Royal England plants and notes about the fruits and plants that they found while tripping around on Clipper Ships. We owe a great deal to their work and diligence. Something my high school history teachers forgot to explain. Maybe they should trash their committee approved misinformation texts they claim are history books and use books like this instead. The students would learn a great deal more and they would better understand the complexities of life (I do live in a fantasy world).
I mentioned above the issue of the upcoming death of the Cavendish. The banana industry has spent the last 30+ years trying to find a replacement. Something that is difficult to do from a plant biology perspective as bananas are essentially seedless and they need to find/create/germinate/husbandry one that can withstand modern production, are seedless, have great taste, are resistant to nasty diseases, can handle shipping, and look like bananas. Their task is great, difficult, and extremely important.
Ultimately, many books I read in 2008 were memorable, well written, and continue to be resident in my DNA. In the end, a book about the banana won out.
Oh, and by the way, I simply saw its cover at my local B&N on a sunny Sunday and picked it up. Absent that trip to that bookstore, I may never had ventured out and read a great book, one that changed the way I think.
When was the last time you just walked through the bookstore, stopping to read the new titles (and some of the old ones) and venture out to read something not on a “must read” or “currently cool” list?
Think about it.
The best to each of you as we move from one year to the next. As my favorite professor used to say, “Time is or Time is ising” it is your time choose wisely, reach out and enjoy.
Dan Morris
December 31, 2008
Ron Baker - 12/28/2008
Ed Kless - 12/27/2008
A recent post by Mike Masnick at TechDirt, reminds us the the bizarre notion of measuring productivity based on hours worked is not limited to the professional firm. He cites a New York Times article as further evidence of this madness and to his credit clearly dismisses the practice as silly. Good for him!
In an example worthy of a VeraSage imprimatur, he writes about the logical extension of the hours fallacy suggesting that companies calculate the lost cost due to employees sleeping eight hours a day.
Ron Baker - 12/27/2008
Firms have an irrational faith in the effectiveness of performance appraisals. Most firms and employees are dissatisfied with the performance appraisal process, so it remains a curiosity why this methodology continues to exist.
Peter Drucker pointed out continuously in his books that the appraisal process itself were designed by the clinical and abnormal psychologists, who were concerned with what was wrong with the patient, diagnosing their weaknesses rather than focusing on their strengths.
Yet good leaders—like good coaches—design performance processes and tasks around a person’s strengths, and ignore—or make irrelevant—their weaknesses.
An excellent article from The Wall Street Journal, ”Get Rid of the Performance Review!” delivers 7 reasons why this archaic ritual must go.
(Thanks to Mark Bailey for pointing this article out to us. Mark’s firm has already eliminated the performance appraisal and is working on establishing a Results-Only Work Environment, or ROWE).
The author, Dr. Samuel Culbert, professor of management at UCLA, makes a compelling and succinct case for why performance appraisals are a dysfunctional pretense.
As a compliment to the article, a must-read heretical book, Abolishing Performance Appraisals: Why They Backfire and What to Do Instead.
Tom Coens, one of the co-authors of the book, is a labor lawyer and does an excellent job in dispelling the myth that appraisals are necessary for legal protection.
The authors also point out these salient facts regarding the process:
Appraisal is not the system that drives pay, careers, and status; it is an incidental effect of those dynamic systems. Appraisal is primarily the paper-shuffling that sanctifies decisions already made.
Another problem with the process is the “annual” aspect of it; a year is far too long a time frame to evaluate and give feedback to any worker, but especially a knowledge worker.
Any organization of humans—be it a school, a nonprofit agency, a governmental unit, or a business—is going to have a bell curve of high, average, and below-average performers. It is estimated that the best computer programmers are at least 12 times as productive as the average.
Alan Eustace, a vice president at Google, says that “one top-notch engineer is worth 300 times or more than the average” (The Economist, October 7, 2006: 22).
Given human nature, not much can be done about this distribution, but what we can do is not exacerbate the problem of below-average workers by designing systems around their weaknesses at the expense of placing a ceiling over the heads of the superior performers.
Firms should strive to create a meritocratic environment that rewards risk taking and innovation, rather than rigid, stultifying union-type jobs that reward seniority, mediocrity, and complacency.
It is not uncommon, for example, for salespeople working the floor of Nordstrom to earn over $100,000 per year; as they say, “Your performance is your review.”
What to do instead
In the article, Dr. Culbert suggests conducing “previews,” which are a two sided, reciprocally accountable process, focused on the future rather than the past.
This is Peter Drucker’s concept of a manager’s letter, wherein each knowledge worker defines the objectives of his superior’s job and his own job, the lists the tasks he must do to achieve these goals, along with the resources needed, obstacles, etc.
We also suggest as a replacement to appraisals After Action Reviews and Before Action Reviews.
Business is based on performance and results, not objective rankings on stale performance appraisals.
Isn’t it time to eliminate this wasteful process in firms of the future? What do you think?
Ed Kless - 12/23/2008
In the January issue of Reason magazine, Brian Doherty assess the impact of Sarbanes-Oxley to date.
From the article, “… Sarbanes-Oxley is more harm than help. In a 2007 survey of professional fraud examiners, three-quarters said institutional fraud was more prevalent than before the law was passed.”
Ron Baker - 12/23/2008
There’s been lots of discussion of the billable hour lately in the legal blogosphere. David Giacalone has another post debating the merits of the billable hour while arguing that advocates of Value Pricing are unethical.
I’m over debating David, as he’s impervious to empirical evidence and doesn’t seem to grasp the economics of value and pricing. He also hasn’t added one original thought to this debate. We at VeraSage have refuted every one of his arguments.
But I found the comments to the post interesting, especially the commendable defense of Value Pricing from Allison Shields. Also, D. Michael Grodhaus has a post on whether alternative fees are ethical. No, they are not. For a very simple reason I have explained before.
A more economically literate discussion of the billable hour comes from Bruce MacEwen at Adam Smith, Esq. (Hat tip to Stephanie West Allen for pointing this post out to me).
Bruce details all of the things wrong with the billable hour, points that have been made now for over twenty years: it’s unethical; it’s the wrong theory of value; it’s demoralizingto knowledge workers, equating the value they create with the time they spend—as Bruce says “You are your watch"—and a myriad of other deleterious effects.
One argument that constantly comes up—even mentioned by David Giacalone—is the issue of the economic model of perfect competition, where price equals marginal cost of production. But the problem with this argument is perfect competition is a model, not a depiction of reality.
Perfect competition assume consumers have perfect information, that sellers have no control over the price of their goods and services, that marketing, advertising and branding have no power (tell that to Procter & Gamble), and other assumptions that simply do not comport to reality.
Not to mention that the legal profession is nowhere near a perfectly competitive model, and not simply because consumers don’t have perfect information. Its also got major barriers to entry on the supply-side.
I’m willing to concede pricing power in the legal industry if lawyers agree to give up the governmental licensure of attorneys and open it up to the free market. Milton Friedman wrote about this for years—in fact, his PhD thesis was on this very topic.
Economists have proven for decades that occupational licensure does not protect the public, it merely protects the licensees from the public and competition. If you doubt that, ask yourself who is always asking for licensure—from lightening rod salesman to interior decorators? It’s always the profession, never the public.
The debate over the billable hour, intellectually at least, is over. The merits of fixed pricing over hourly billing have been empirically proven. There is simply nothing to be gained by continuing this debate with luddites who don’t understand economics.
Instead, we should be focusing on convincing law firms to transition to Value Pricing. Sellers change pricing strategies, never customers, which is why I believe the Association of Corporate Counsel’s so-called “Value Challenge” is doomed to fail.
Is it in law firms self-interest to make this transition? Yes. How much money is being left on the table by firms because of sub-optimal pricing? Pricing for value is hard enough, but it’s impossible if you remain mired in Karl Marx’s labor theory of value.
I also find the discussion of how firms will experiment with, or possibly be forced into, alternative billing due to the current difficult economic times complete hokum. The billable hour has survived many recessions, usually emerging ever more entrenched than before.
We believe there are two major trends that will force law firms to convert to a Value Pricing model.
One, the unsustainability of the existing model. If a firm wants to make more money it has to bill more hours. This makes little sense in an intellectual capital economy ruled by ideas and minds rather than physical brawn. Not to mention the billable hour puts a ceiling on a firm’s income.
Two, the competition for talent. Increasingly, has more and more firms adopt Value Pricing—and ditch timesheets—they will begin to pilfer talent from other firms. No one entered the legal profession to bill the most hours. Attorneys are knowledge workers, not sweat shop union employees paid by the hour.
As for whether or not Value Pricing is superior to hourly billing, I would suggest folks just ask the firms profiled in the Trailblazers section herein.
But also consider this profile the finest law firm in the world from Malcom Gladwell’s latest book, Outliers: The Story of Success (page 155):
It turns down much more business than it accepts. Unlike every one of its competitors, it does not bill by the hour. It simply names a fee. Once, while defending Kmart against a takeover, the firm billed $20 million for two weeks’ work. Kmart paid—happily.
There is no firm in the world that has made more money, lawyer for lawyer, over the past two decades.
The firm? Wachtell, Lipton, Rosen & Katz.
Is this firm unethical, David? Is it ripping off its clients?
Or is it obsessed with the value it creates rather than the time it spends? What can possibly be wrong with the firm capturing a portion of that value over and above meaningless hourly rates?
Law firm leaders can continue to debate the merits and demerits of hourly billing, or they can focus on creating more value for their customers, while capturing a greater proportion of that value.
The choice is theirs, and theirs alone.
Ron Baker - 12/21/2008
This can of worms is still opened.
Once again, Bruce Marcus has weighed in with another article on why branding for PKFs doesn’t add value to customers.
Read his ”Does Branding Make Clients?” here.
I find his arguments incredibly compelling. All but a handful of PKFs have a “brand,” in the true sense of that word. Instead, they have reputations.
A brand, by definition, is a safe place for a customer to be, designed to command a price premium. Most branding campaigns in PKFs add no value to the customer, are not used for better pricing, and hence are not true brands.
I know this is controversial, but I think the empirical evidence is with Marcus. What do you think?
Ed Kless - 12/20/2008
Ok, this is hysterical. A December 9, 2008 story appeared in the Globe and Mail of Canada entitled, Think Value Not Hours Billed — a promising title. Alas, it falls woefully short. It is a prime example of the problem of starting with the wrong theory. In the end their method is nothing more than lawyers trying to get paid more per hour.
“Open up a dialogue about value.” What a joke! This is still about effort, efficiency, capacity, and therefore billing by the hour. What nonsense!
Ed Kless - 12/19/2008
Nothing comes from nothing; nothing ever will. - Oscar Hammerstein
Boy, is that lyric ever wrong. (Bonus points, if you can name the song without Googling it.)
Recently, I read Charles Seife intriguingly titled book, Zero: The Biography of a Dangerous Idea and while I know it was recommended to me, I
cannot recall who provided me with the recommendation. I thought it was Ron Baker, but no, he has not read it. So, in a sense, even this review comes from nothing.
In this short, but fun read, Seife traces the history of the zero from its humble beginnings as an idea, through its use as a placeholder, to its current status as the only number capable of destroying everything (including temporarily disabling the USS Yorktown on the high seas. The humble zero shook the foundations of philosophy, caused arguments, even wars, and now is beginning to play its part in understanding the very origins and substance of the universe.
While I highly recommend reading the book, I did extract a few nuggets for reading here.
First, there are at least three ways that we can prove that something comes from nothing or to express it mathematically that 0 = 1.
Proof A:
Let a = 1 and b = 1; therefore b = a.
b2 = ab, Premise 1
a2 =a2, Premise 2
a2 - b2 =a2 - ab, subtract premise 1 from premise 2
(a + b) (a - b) =a(a - b), Factor
a + b = a, Divide both sides by (a - b)
b = 0 Subtract a from both sides
Since a = 1 and b = a, therefore 0 = 1.
Proof B:
Let a = (1 - 1) + (1 - 1) + (1 - 1)… = 0
Let b = 1 + (-1 + 1) + (-1 + 1) + (-1 + 1)… = 1
The ellipses in the previous two equations indicate the infinite repetition of the parenthetical express. Therefore the two are arithmetically the same, they are just grouped differently, therefore a = b, therefore 0 = 1.
Proof C: (hat tip to Joe Santoro)
00 = 1, therefore 0 = 1.
Why is this so important? Well, because if you can prove that 0 = 1, you can then prove that 0 = anything, certainly any number. For an example of this simply replace the 1 that leads the Proof B, let b example with any whole number, fraction, or decimal number. (By the way, there are an infinite number of decimal numbers between any two whole numbers.) In short, proving that 0 = 1 is the ultimate in understanding the idea of subjective value - value is what the customer says it is.
What is fascinating about the book was learning that some of the foundational mathematical concepts that we accept today are based on this idea that 0 = 1. Calculus is based on the idea than we can compute the area of an irregular object as long as we allow our estimations to set 0 = 1. Had this been explained in this manner to me back in high school or college perhaps I would not have dreaded the course so much. I equated calculating the area under a curve to torture. Theory is important.
One last idea I had while reading this book was to create a new formula (tongue in cheek of course) for computing value. Seife clearly points out that calculating speed in the old “A train leaves New York” type word problems is not always as simple as distance = rate times time. What train moves at an absolute constant speed? Any train would begin slowly, speed up, slow down around curves and crossings, etc. It does no good to calculate speed at a constant rate, i.e., 140 mph for 3.5 hours. What was required for mathematicians was a higher degree of understanding. They achieved this through Newton’s calculus. (Remember 0 = 1.)
An example would be calculating the velocity of a falling object, which falls at 32 feet per second per second. After one second, the object is falling at 32 feet per second after two seconds it is falling 96 feet per second and so on. This is expressed as v = gt2/2 where v is velocity, g the force of gravity and t is time. As Seife puts it, “Rate times time equals distance is not a universal law; it doesn’t apply under all conditions.”
Look at the last sentence again and replace the word distance with value. See where I am going. Imagine a formula for a professional firm using the “falling object” model (which, by the way, while still wrong, is less wrong than value = rate x hours). It would look something like this — value = rate x hours2/2. Picture explaining this to a customer, “Well we bill you $150 for the first hour, than $300 for the second, $675 for the third, etc., since we spent a total of ten hours on your matter, our bill comes to $7,500, any questions.”
Again, while still wrong, the above is less wrong. What is needed is for professionals to make the leap that 0 = 1 (that value is subjective). VeraSage has been sounding the alarm on this for years. Dare I say Ron Baker = Issac Newton.
We now have the math! Worshipers of the ABH give up! We have proven you wrong again, this time with your own beloved mathematical formulae.
Ron Baker - 12/16/2008
On the other end of the phone was Paul Dunn inquiring if there was anything special I wanted to do or see on my upcoming March trip to Great Britain. We had just finished a twelve-city tour of Australia and New Zealand in February 2000, conducting Preview seminars for the Results Accountants’ Bootcamp, and now I was about to do the same with the UK RAS Team. Paul knew this was only my second visit to Great Britain, so he wanted to make it special.
I had only one request: I wanted to visit Karl Marx’s gravesite at Highgate Cemetery. Well, somehow that request got assigned to Paul O’Byrne, who ended up driving me out to the cemetery after a seminar I presented to RAS members.
It wasn’t the first time I had met Paul. We first met the prior week at Stratford-upon-Avon (birthplace of William Shakespeare), at another RAS event where Ric Payne and I presented. Paul had done a Mind Map of my talk, which I found ingenious. I knew he was going to present the Previews with me around the UK, so we’d have plenty of time to get to know one another.
Essentially, my first eighteen months of getting to know Paul consisted of one enormous argument over the necessity of maintaining timesheets in a professional knowledge firm, not to mention the virtues of laissez-faire capitalism versus a more centrally planned economy on the European model. We’d argue everywhere—on the phone, in the car to and from Heathrow, driving through the crowded streets of London, in pubs and snooker clubs while downing beer and crisps, and at the many historical sites he showed me, from Oxford and Cambridge to Bath and Liverpool.
I’ll always remember one seminar I gave in 2001, when Paul and I were still debating. Prior to the program he gave me a tour of his firm (O’Byrne and Kennedy) and I surreptitiously slipped one of the firm’s timesheets into my pocket. I used that as a prop during my talk, since I found it amusing that the time started at 7am and went to 7pm, joking that if one worked for OBK, look how long you could account for your time in ten-minute increments in one day!
After about the 15th mention of this, I saw Paul pick up his cell phone. Little did I know he instructed his colleague to reserve the Web domain of www.ronbakersucks.com, thus launching off a virtual retribution cannon at his disposal whenever I said anything that displeased him. He updated it often, with a wit that went for the jugular, not the jocular.
Then in September of 2001, OBK decided it was time to go all the way and finally trash timesheets, which they did on July 2002. I would like to think that it was the force of my logic that persuaded them, but Paul always contended they simply did it to shut me the hell up.
From that point on, Paul and I would travel the world together, doing over 100 programs all across the USA, UK, Prague, Ireland, Canada, Australia and New Zealand. We worked seamlessly together because even though we are very different people, we shared a common vision that bound us together—a desire to change the world; meaning not only change how people think, but also how they behave.
Paul loved ideas. He could take one, play with it, improve upon it, and then have the courage to go try it out on an audience, or in his firm. He constantly stretched my mind. On all of our trips we would stay up late discussing better ways to present our ideas. Since Paul was such a wunderkind with technology, he could always edit the right video clip or put together a montage that was perfect to make a particular point.
He always made time for people, especially me, which is why I began calling him My TA (Trusted Advisor). He edited every one of my books, offering criticisms, improvements and ideas that enhanced their readability. Even when his first fatal diagnosis cruelly cut his time short, he used some of his most precious resource to read my latest book, which is dedicated to him.
Thankfully, our time together wasn’t all work. We took a trip to Paris with Paul’s lovely wife, Daniella, that I will always remember. On another occasion we spent an incredibly hectic one day in Rome, with Paul running around showing me all the highlights, his ubiquitous video camera even running inside the Sistine Chapel, to the chagrin of the local police who nearly threw us out. He taught me how to play snooker, annoyed that a Loud Mouth Yank could beat him at his own game. He loved Yosemite and Lake Tahoe, along with the drive down the California coast, where we coaxed him to try sushi for the first time (he hated it).
In true Monty Python fashion, Paul would go way out of his way to make a joke. One of the funniest things that I (and my colleague Dan Morris) have ever read is the Mad magazine Flaxbender Annual Report, a take-off on a corporate financial statement. After showing it to Paul, he drafted his own report that beautifully illustrates his wit, humour, warmth, and love for his family.
I had the great good fortune of meeting and spending time with Paul’s family—Daniella, Luke, Katie, Laura and Frank. I know nothing I write will ever compensate for your loss, but I hope the following passage from the Talmud gives you solace, especially since Paul believed in the quality of life, not just the quantity:
In a harbor, two ships sailed: one setting forth on a voyage, the other coming home to port. Everyone cheered the ship going out, but the ship sailing in was scarcely noticed. To this, a wise man said: “Do not rejoice over a ship setting out to sea, for you cannot know what terrible storms it may encounter and what fearful dangers it may have to endure. Rejoice rather over the ship that has safely reached port and brings its passengers home in peace.”
And this is the way of the world: When a child is born, all rejoice; when someone dies, all weep. We should do the opposite. For no one can tell what trials and travails await a newborn child, but when a mortal dies in peace, we should rejoice, for he has completed a long journey, and there is no greater boon than to leave this world with the imperishable crown of a good name.
How or why do two people become friends? The French writer Montaigne supplied what is perhaps the best answer: “Parce que c’était lui, parce que c’était moi” (because it was him and because it was me).
On November 6th Michelle Golden and I, along with Paul Kennedy, visited Paul at his home, reminiscing and laughing about all the glorious times we have had together. At the end of our visit, I said goodbye warmly, embracing Paul, knowing that probably I would never see again this wonderful human being.
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